Apple reported its first-ever unit decline in iPhones this year, and Wall Street is understandably worried because that device is its bread and butter. Now one analyst says not to worry, however, as the rapid increase in research and development spending seems to indicate that the company is reinventing itself.

Apple Inc. Reinventing Itself Through R&D: Analyst

Apple ramps R&D expenses

According to Fortune‘s Don Reisinger, analyst Neil Cybart of Above Avalon dug into Apple’s research and development expenses and explained that at some point in the future, we’re not going to be calling the company “the iPhone company” any more. After digging through Apple’s financial statements, he found that the company spent over $4 billion on R&D in 2013, $6 billion in 2014, and $8 billion last year.

He believes the company’s R&D spending will surpass $10 billion this year and $12 billion next year and explained that increasing this metric so quickly is ” a remarkable feat.” He added that this is an unprecedented ramp in R&D expenses for the iPhone maker going back to 1996, which he says means management may be up to something big.

He notes that Apple may simply be increasing spending to expand its product line or enter more categories, but he believes the more likely story is that the company is trying to transform itself into something different.

“Massive increase in investment” needed

Cybart argues that the reason the iPhone maker is ramping R&D spending is because it has “a few big bets that require a massive increase in investment.” He sees the two “most logical” categories as being in wearables and personal transportation. He believes that both of these areas will take Apple outside its area of expertise and states that management “is literally building a new company with additional capabilities and strengths.”

Rumors that the company is working on an electric car abound, and the analyst’s comments are only adding fuel to the fire. Company executives have indicated interest in building a car, and there have been numerous reports about key hires that were made in this area. Apple has hired former Tesla employees, and Tesla CEO Elon Musk called the company’s car project an “open secret.” Because of the huge ramp in R&D spending, Cybart assigns an 80% probability that the company is working on a car.

The area of wearables is certainly less of a stretch for Apple than a car would be, particularly since it has already released its first wearable. The company hasn’t given any sales figures for the Apple Watch since it went onto the market, instead choosing to lump it into “other products” in its financial reports, and thus far, many reports have suggested that consumer interest is lackluster.

Apple stock slumped 2.39% to $90.30 during regular trading hours on Thursday.

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